Every Extra Dollar Compounds Twice

An extra payment on a mortgage is one of the highest-return moves available to a homeowner, because it earns your mortgage rate for the entire remaining life of the loan. On a $300,000 mortgage at 6.5%, adding $200 a month is the same as finding a guaranteed 6.5% after-tax return — and it shortens the loan by years. The effect is even bigger than it looks: because each extra dollar skips the interest it would otherwise have carried, the savings snowball the earlier you start. A single $10,000 lump sum in the first year of that same loan saves more than $50,000 in interest and retires the mortgage three years early. Just confirm your servicer applies extra payments to principal, not to next month's bill.